Global Marketing Chapter 5

Global Marketing Why do I need to study this? Why do I need to study this? Why Go Abroad? Why Go Abroad? Increased Revenue Increased Revenue Economies of Scale Economies of Scale Cheap Labor Cheap Labor Why Not Go Abroad? Why Not Go Abroad? Lost Jobs Lost Jobs Outsourcing Outsourcing

Global Marketing Strategies Global Global AKA International AKA International Market existing products in the same way Market existing products in the same way Multinational firms Multinational firms AKA Multidomestic AKA Multidomestic Product variations for each country Product variations for each country Transnational firms Transnational firms Standardize across similar markets while adapting them to specific markets Standardize across similar markets while adapting them to specific markets

Environmental Factors- Social Cultural diversity Cultural diversity Values Values Customs Customs Foreign Corrupt Practices Act Foreign Corrupt Practices Act Nonverbal behavior Nonverbal behavior Cultural symbols Cultural symbols Semiotics Semiotics Language Language Back translation Back translation Cultural ethnocentricity Cultural ethnocentricity Consumer ethnocentrism Consumer ethnocentrism Source: facts-about-japan.com

Environmental Factors- Economic Stage of development Stage of development Developed v. Developing Developed v. Developing Gross domestic product Gross domestic product Economic infrastructure Economic infrastructure Communications, transportation, financial, and distribution systems Communications, transportation, financial, and distribution systems Consumer income and purchasing power Consumer income and purchasing power Government subsidies Government subsidies Currency Exchange Rates Currency Exchange Rates

Environmental Factors- Political- Regulatory Climate Protectionism Protectionism Why? Why? Methods Methods Tariffs Tariffs Quotas Quotas Reducing Protectionism Reducing Protectionism General Agreement on Tariffs & Trade (1948) General Agreement on Tariffs & Trade (1948) World Trade Organization (1995) World Trade Organization (1995) Chicken War Chicken War Trade blocs and International Organizations Trade blocs and International Organizations

Trade Blocs NAFTA NAFTA Three members Three members Purpose Purpose CAFTA CAFTA Effects Effects Union of South American Nations Union of South American Nations Mercosur + Andean Community Mercosur + Andean Community ASEAN ASEAN

Trade Blocs European Union European Union 27 members 27 members 500 million people 500 million people $2 trillion investment $2 trillion investment Effects Effects

International Organizations World Bank World Bank Loans to developing countries Loans to developing countries International Monetary Fund International Monetary Fund Emergency loans Emergency loans Group of 20 (G-20) Group of 20 (G-20) 20 largest economies 20 largest economies Source:

Environmental Factors- Political- Regulatory Climate Natural Resources Natural Resources Oil-producing countries Oil-producing countries Saudi Arabia Saudi Arabia Japan Japan Africa Africa

Global Market-Entry Strategies Four strategies Four strategies Exporting Exporting Licensing Licensing Joint venture Joint venture Direct investment Direct investment

Exporting Indirect exporting Indirect exporting Use an intermediary Use an intermediary Least profit Least profit Direct exporting Direct exporting Sell directly to foreign country Sell directly to foreign country 60 percent of U.S. firms using this strategy have less than 100 employees 60 percent of U.S. firms using this strategy have less than 100 employees

Licensing Advantages Advantages Disadvantages Disadvantages Three types Three types Contract manufacturing Contract manufacturing Contract assembly Contract assembly Franchising Franchising

Joint Venture Two companies (one foreign, one local) go together to enter market Two companies (one foreign, one local) go together to enter market Advantages Advantages Disadvantages Disadvantages

Direct Investment Biggest commitment Biggest commitment Advantages Advantages Disadvantages Disadvantages

Porter’s Competitive Advantage of Nations Factor conditions Factor conditions Demand conditions Demand conditions Related and supporting industries Related and supporting industries Company strategy, structure, and rivalry Company strategy, structure, and rivalry Economic Espionage Act Economic Espionage Act

Global Marketing Mix Products Products Product invention Product invention Product adaptation Product adaptation Promotion Promotion Language Language Source:

Global Marketing Mix Place Place Reebok Reebok Coke Coke Pricing Pricing Exchange rates Exchange rates Dumping Dumping Countertrade Countertrade Bartering Bartering Source: